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Milk prices to soar as water scarcity hits production

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Milk prices tend to rise in summers as production falls, but this year may be worse.

As sweeping heatwaves and drying dams leave dairy animals thirsty, milk productivity will fall and prices will rise, agriculture experts said.

While spot traders said raw milk with 6.5% fat is currently being sold at ₹47-48 a litre against last year’s ₹57-58, consumer affairs department data showed all-India average retail and wholesale prices on Sunday were at ₹57.6 a litre and ₹5,420.7 per kilolitre compared to ₹56 and ₹5,233, respectively. India is estimated to have produced 240-245 million tonnes (mt) of milk in 2023-24, up 4-5% from a year earlier.

“As this summer is expected to see above-average temperatures with increased heat waves in Maharashtra, Odisha and the southern states and with falling water reservoir levels, water shortage is expected to be seen for animal consumption, which is expected to affect yields leading to lower milk production in Q1 FY25,” Pushan Sharma, director-research of Crisil Market Intelligence and Analytics said. “However, a healthy monsoon is expected to compensate for the fall in production in summer season.”

“In the past, it has been observed that higher temperatures in summer lead to animals falling sick more often and lower water intake due to water shortage further impacts their health. This leads to a fall in yields of about one litre per day. Hence, if a greater number of animals fall sick, this would lead to a decline in milk yields in summers with above normal temperatures,” Sharma added.

Water levels in India’s 150 major reservoirs stood at 35% as of 4 April, Central Water Commission data showed. The available water level was 61.8 billion cubic meter (BCM), 17% lower than a year ago, and 2% below the average of last 10 years. Meanwhile, the official weather forecast said most regions will witness above-normal temperature in April-June, with central and western peninsular regions witnessing the worst of heat waves. However, southwest monsoon may be normal to above normal, it said.

“Commodity prices will not go down; fat prices will go up, skimmed milk power prices will stabilize around the current value for the time being, and MRPs of milk, butter etc. will remain stable at the present level as companies will have to get the volume growth,” Sodhi added.

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R.S. Sodhi, president of the Indian Dairy Association agreed that the organized sector will get less milk this year due to heat waves. Demand for paneer, curd, butter milk and ice cream during summer will be much higher than last year, he said, adding he doesn’t expect their prices to rise.

“Raw milk prices will increase, but it will not have impact on fresh products because prices of these are lower compared to finished products. In contrast, fat prices in India will definitely go up because international prices of fat are around ₹150 per kg higher than in India,” he said. “If summer is very harsh, on one side, production or procurement reduces, and on the other side, demand increases. The situation may be cushioned by dairies holding good stock,” Sodhi added.

Queries sent to the department of animal husbandry & dairying, agriculture ministry and consumer affairs department remained unanswered.


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